According to the Corinthians | Alfred Pisani

International Hotel Investments (IHI) p.l.c is set to launch a public offering of €150 million on the London Stock Exchange by the end of the year, in a bid to restore its free-float to 25%.

Speaking to MaltaToday, IHI and Corinthia Group Chairman Alfred Pisani says that the offering – originally planned in 2008 but postponed due to the global financial crisis – is pinned to the outlook of a more buoyant stock market towards the end of this year.

The listing coincides with the launch of  Corinthia Hotel in London, the group’s brand new flagship hotel which has set a new benchmark for luxury in the British capital.

The £300 million, 294 room hotel has already attracted acclaim throughout the hospitality sector around the world, and brought with it increased added value to Corinthia’s portfolio of trophy hotels.

During the coming months, IHI will be in a position to repay £41 million out of a £110 million bank loan undertaken to develop the prestigious London landmark property, with the funds being raised through the sale of luxury apartments which have been developed next door to the London Hotel in Whitehall.

Pisani is head over heels about the success of the London development, but is quick to point out the importance of a solution to the Libya crisis, which has impacted on the group’s performance in 2010 and during the first months of this year.

“Should the crisis in Libya persist, the London listing would more than likely have to be postponed,” Pisani said, while he augured a peaceful end to the strife the Libyan people are going through.

Corinthia operates a luxury hotel in Tripoli and since the uprising last February,  the company had to repatriate all of its foreign staff, however it kept operations ongoing on low scale to service the few remaining guests who remain in the Libyan capital.

The Corinthia Hotel Tripoli – known to be the best performing hotel for the group – was initially impacted by the Libya-EU visa dispute in early 2010 when travel into Libya became difficult.

Pisani explains that events in Libya have impacted the Hotel in Tripoli with a turnover drop of €8.5 million, which translated into a loss of €7 million in operating profit for the hotel.

Pisani is on the phone with his Tripoli managers on a daily basis, monitoring the situation, but the impact of the Libyan uprising on the Maltese owned company is tangible in the preoccupations raised over the participation of the Libyan Arab Foreign Investment Company (LAFICO) within the company.

“We were asked to produce and had to obtain clarifications and waivers from various governments to reassure our trading partners and suppliers that doing business with us did not infringe any UN or EU sanctions,” he explains.

“The Maltese government has been extremely helpful to us and has given us unconditional support through this time,” he added.

Lafico is a minority shareholder within a Maltese registered public company with over 4,000 shareholders.

However the difficulties encountered due to the Libya crisis have seemingly been watered down by the huge response obtained by Corinthia in the United States during a road show held in March to announce the launch of the London hotel and appeal to the US market for its support towards the new venture.

“The road show was extremely successful and it this is evident from the bookings that are flowing in from this very important market.”

The US is a very important market to the extent that Pisani is eyeing the ‘Big Apple’ to eventually also acquire a property in New York. Other planned investments to enhance the Corinthia portfolio are properties in Beijing, Paris and Rome.

“Slowly but steadily we will get there, but we needed the London hotel to showcase our commitment,” the group chairman explains.

The public Company, IHI, now has a total inventory of 2,700 rooms with a share capital of €553 million, and with €350 million in bank loans and corporate bonds.

“As a company, we have shown the ability to invest wisely and complete our assets at a cost which is significantly lower than the industry norm,” Pisani says, adding that the group has weathered the storms of economic recession and other uncertainties.

“What is certain, though, is that we have managed to develop a unique collection of trophy hotels, and apart from distributing 40% in gross dividends over the years, there is an even more important picture to look at: the value of the IHI owned properties, given that it is a real estate investment.”

Pisani explains that his group has significantly achieved capital appreciation, and the balance sheet now stands at €1.1 billion, reflecting the valuations made by professional advisors of 1.13 per share.

Corinthia now also boasts a sophisticated reservations system that is generating higher volumes of business, which is set to yield further positive results to the groups business.

Pisani still considers the business he created to be “relatively small” and remains more or less a family concern, with himself and his colleagues as the directors.

But the empire built from a restaurant business in 1962 – from a villa that was later developed into the Corinthia Palace Hotel in Attard – is a success story in its own right.

“My parents had bought the villa in 1959 but my father died a few months after, leaving us faced with a heavy commitment to repay and had to do something about it, so we decided to turn it into a restaurant,” he says, adding that what happened from then on redirected his destiny.

When Malta obtained independence in 1964, Pisani – on behalf of his brothers and sisters – sought the incentives offered to entrepreneurs by the government of that day, and applied for a grant to build a hotel on the site around the Attard villa.

“However, added funds were needed to the tune of Lm900,000 to be able to develop the project and when I went to the National Bank to apply for the loan, I was asked for collateral which I didn’t have.

“I remember insisting with the bank that what I had was the land and most importantly my family’s total commitment to the project. I had sketched the building layout myself and presented it to the bank, and was happy to learn after some time that the loan was to be granted.”

Pisani enjoys a reputation as being an excellent financial administrator to the extent that even during his childhood, his brothers would give him their pocket money to pursue his varied hobbies.

“When it came to build the Corinthia Palace, I could not find a contractor, and decided to do it myself and remember asking the only builder I knew, who had just built my house to take on the job and to find another four groups who could actually start the construction. We did start the construction, we bought a small second hand mixer and we did the job for two straight years, spending from morning till night building the hotel,” Pisani explains.

So how did the name Corinthia come about?

Pisani says that it was his mother’s suggestion to name the hotel Corinthia, after the Corinthian sculptured columns at the villa that still stand as the majestic hall in the Corinthia Palace Hotel in Attard.

And the Libyan participation within the company?

“It all came by coincidence. By 1974 the National Bank from where I undertook the loan were pressing me to increase my repayments as a run on the bank was imminent and cash-flow was low.

“I remember that a Libyan governmental delegation was visiting Malta and they were seeking opportunities for investment and convince them to invest in the hotel business and invested with us. With that money I immediately paid off the loan, a mere week after the National Bank was nationalised.”

Pisani was always hands-on his business, and says that his biggest assets are not the properties but his employees who in total exceed 2,500.

“I call it the ‘Spirit of Corinthia’ where I, along with my management staff have adopted a policy whereby what we know is transmitted to our colleagues, sharing knowledge and lending an ear to their concerns.

“We are all human, and I always stressed that the better my employees feel, the better the company does. This is a chain reaction, a better person has an effect on his family and his work, benefitting all, his village, town, and even the country.”